Many long-term investors, particularly value investors, are attracted to the income provided by stocks that pay healthy dividends. The major stock indexes have seen a remarkable run since last March, creating the strong possibility that the market is overvalued. Moreover, the weak global economy is cutting into profits, often resulting in smaller dividend payments. In this environment, value investors need to be highly selective in the search for companies that stand to maintain dividends, and see share price increase into the future.

Investors may want to take a look at the utilities sector for yield and good potential for increased share price. Roger S. Conrad points out that utilities are benefiting from low interest rates.

In fact, utilities today are borrowing at some of the lowest interest rates seen in more than a generation. That’s the result of still-low benchmark rates, coupled with a dramatic shrinkage of yield spreads investors require between bonds issued by utilities of all stripes and Treasuries. And companies are taking full advantage to deleverage their balance sheets, stretch out maturities, cut interest expense and even lay the ground work for financing needed infrastructure.

Utilities sailed through the recession in part because they provide essential services, demand for which is rarely affected much by recessions. Equally important, however, is the massive reduction of debt and operating risk since the fall of Enron in 2001 nearly brought the entire industry to its knees.

Alan Brockstein says that utility companies should continue to have good access to capital, and highlights ten companies with high yields, low debt, and a history of raising dividends.

The Big Dividend Stock List is a good resource for finding dividend stocks. In addition to the list, the site also has some tips on dividend capture strategies for short-term traders. Also, I have recently been visiting Yieldpig, which features specific high-dividend stocks along with some useful fundamental analysis.

Whether one is investing for the long term, or trading on a shorter time horizon, it pays to buy stocks when they are giving technical buy signals. I did a survey of high yield stocks, and came up with a short list I like right now.

- Babcock and Brown Air (FLY): Yieldpig reports, “FLY trades at .6 times book value. Sell the planes, the buildings, the desks, and the filing cabinets, and the company is estimated to be worth $15 a share.” I like the solid rising trend, and the high volume breakout to start the year.

- Caterpillar Inc. (CAT) offers a decent (2.79%) dividend, but what I like most is the breakout last week. This is an example of a stock that cold have been bought just before the ex-dividend date (1/15) as a short-term trade, considering the strength of the technical setup.

- AT&T (T): I’m going to agree with Cramer, who says “AT&T is a big, safe telco with great exposure to the mass adoption of smartphones” and mobile internet. It also pays a 6.1% dividend. Price looks oversold here, and likely to find support at the 200 day moving average. I would look for price to break out of the downtrend before buying.

- Great Northern Iron Ore Properties (GNI): For the long-term, I like commodities and energy. GNI sports an 11% dividend, and is showing signs of an impending breakout. I would be a buyer on a move over 95.50 with volume.

- Suburban Propane Partners (SPH): The chart below is the 10 year monthly chart. SPH pays a 6.79% dividend on top of that solid long-term price action.